Millions of Americans are saving for retirement in 401(k)s and Individual Retirement Accounts (IRAs). These tax-deferred accounts allow people to invest pretax dollars, but require them to pay taxes on their deposits and accumulated earnings at the time of withdrawal. By contrast, a Roth account allows individuals to deposit after-tax dollars, but withdraw the accumulated balances tax-free.
The period between 1950 and 2000 was the greatest half-century in human history in terms of the improvement of economic conditions and the betterment of life for the great majority of people. The last quarter of the 20th century was probably the best 25 years of all time from a strictly economic point of view.
International trade – the essence of globalization – benefits the world economy as a whole. It allows people, regions and nations to specialize in the production of what they do best, to enjoy the economies of large-scale production and to buy more cheaply those things that others do best. Impediments to trade limit the benefits of trade.
As 77 million members of the Baby Boom generation begin to retire, America is about to experience one of the most dramatic economic, sociological and demographic changes in its history. The institutions we have relied upon in the past are completely unprepared for what lies ahead.
America 's defined benefit pension plans are in crisis. Traditional defined benefit (DB) pensions are usually paid to retired employees based on years of work and final salary. Although still common at large companies, they have fallen out of favor at small and mid-sized firms. Virtually no new DB plans have been created in the last 10 years. Once the Cadillac of retirement plans, they are now the Edsels of employee benefits, as employers shift to defined contribution (DC) plans, such as 401(k)s.
The President's Advisory Panel on Federal Tax Reform was guided by two outstanding economists, Edward Lazear and James Poterba, and an equally impressive former IRS commissioner, Charles Rossotti. They deserve great credit for recommending critical improvements to our tax system. The list includes eliminating the Alternative Minimum Tax (AMT), limiting mortgage and health insurance tax subsidies, eliminating the deductibility of state and local taxes, rationalizing deductions, exemptions, tax credits and retirement account options, and reducing the taxation of saving. If these reforms are implemented with transition rules that don't give away the store, our tax system will be more efficient and, in many ways, more equitable.
Steve Forbes has done a commendable job spelling out why America's tax system must be simplified. Scrap the mind-numbingly complex, loophole-filled, savings-averse code, advises the editor-in-chief of Forbes magazine, in favor of one elegant, clear rate. A flat-rate income tax is what America needs.
This study examines the effects of fundamental tax reform as well as combining tax reform with fundamental Social Security reform.
Speculative "bubbles" can appear in various sectors of the economy when the Federal Reserve eases monetary policy by lowering interest rates. Generally speaking, when the Federal Reserve tightens monetary policy, the sectors of the economy that went up the most during the easing phase will fall the hardest as the bubble bursts. For instance, stocks went up the most from 1995 to 1998, when the Federal Reserve eased the money supply; stocks fell the most after the Federal Reserve tightened the money supply in 1999 and 2000.
U.S. corporate income taxes are among the highest in the world and – unlike most developed countries – the United States imposes them on income earned by corporate subsidiaries in foreign countries. In recent years, an increasing number of American companies have reincorporated abroad to avoid these U.S. taxes. Their actions have been under fire.
The No Child Left Behind Act, the new school accountability measure that became law in 2001, requires that all states develop and administer standards-based tests to students in grades 3 through 8 and report results by student subpopulation (race/ethnicity, gender, socioeconomic status and disability) for districts and campuses.
Some things never seem to die. The marriage penalty is one of them. The new tax law benefits most married couples somewhat, but it does not eliminate the so-called marriage penalty for lower- and upper-income couples. Even more important, the new law does not address other tax rules that financially penalize married couples and two-income couples
Social Security was created in an era in which the typical household consisted of a working husband and a stay-at-home wife. The structure of Social Security rewards that type of arrangement and penalizes two-earner households.
Congress can help control health care costs, reduce the number of uninsured and promote quality medical care by making an existing health benefit – Flexible Spending Accounts (FSAs) – more flexible, portable and widely available. Doing so would give millions of Americans more control over their medical care and make them more cost-conscious patients.
What is the economic reward for working? The answer is surprisingly complicated. Going to work, earning a living, and spending one's earnings over time raises a variety of taxes and government benefits and lowers a variety of taxes and benefits – and not just in the current year, but in all future years as well.
Foreigners have invested more than $1 trillion in capital in the United States since 1984, when Congress and the Reagan administration established a policy of not taxing interest they earn on U.S. bank deposits.
With continued sluggishness in the economy, the Bush administration is looking at new tax initiatives that will have a quick, positive impact on growth. However, the key to truly helping the economy is long-term, not short-term, thinking.
Diverse state tobacco taxes are a key reason for cigarette smuggling, in which organized crime and terrorist groups increasingly are involved.
Employment has declined in most states, but the federal government continues to tax it. Employers in the 50 states will send an estimated $7.2 billion to Washington, D.C., in federal unemployment insurance taxes this year.
Charter schools are independent public schools that are freed from many of the bureaucratic rules and regulations preventing innovation and flexibility in traditional public schools.
Recent legislation greatly expands the limits on tax-deferred savings accounts, including 401(k) plans and IRAs. This legislation is the latest in a quarter century effort by the federal government to convince Americans that saving through tax-deferred retirement accounts results in lower lifetime taxes.
Parents seeking educational opportunities for their children are now finding more options available to them. Inspired largely by the success of Arizona's Tuition Tax Credit Program, a number of states are establishing tax credits to support scholarships that families may use to send their children to both public and private schools.
People with employer-provided health insurance receive a substantial tax saving because this benefit is not taxed as income. On the other hand, people who buy their own insurance must do so with after-tax dollars. There are proposals in both the House and Senate to remedy this inequity through refundable tax credits for those who buy their own health insurance.
Proponents of cutting the capital gains tax rate cite economic studies showing increases in economic growth and realizations of gains, and even higher revenue for government. Opponents argue that a capital gains tax cut is unfair because it only benefits the rich. But neither side argues from a position of principle. The real question is: Are gains in the value of assets income like any other form of income – such as wages, dividends, rent and interest? Or are they not income?
The most significant change in the U.S. labor force in the last 60 years has been the increasing participation of women. Women now account for 46 percent of the total U.S. workforce, and nearly half of married women with children (47 percent last year) work.